Speaking to ifa, Shine Lawyers NSW commercial litigation and insolvency practice leader, Luke Whiffen, said financial advisers need to be aware that clients are “more sophisticated” than they once were, and are far more aware of their rights to seek “redress” for any losses sustained through their being provided professional advice.
As a result, Mr Whiffen said, advisers need to put in place proper risk management practices to ensure that they are well guarded against any potential legal claims.
“They need to take file notes, need to make sure that the risk assessment of clients’ financial profile is done, and done thoroughly,” he said.
“At the end of the day, if they are not [done properly] then the client is probably going to have grounds for investigating a claim or perhaps making a claim,” he said.
In fact, Mr Whiffen highlighted that many former advice clients have come forward looking to determine whether they have a case against a financial institution or adviser.
“We are definitely seeing an uptick in people who are really trying to take advantage of [our] model which allows them to take on the bigger end of town and to claw back losses of things such as retirement savings,” he said.
However, to raise awareness among clients who may not realise they have a right to make a claim for losses sustained due to poor advice, Shine Lawyers has taken to social media to prompt clients to think about their experiences and whether they suffered losses because of poor advice.
Mr Whiffen said this will encourage former clients to look back at the conduct of their adviser and think about whether “any of their losses were a result of their negligence or misconduct”.
Their advice really is a nothing isn’t it. If an adviser has been doing what they have meant to be doing i.e “know the client”, keep good records and meet BID they are on safe ground – always have been. If they haven’t been doing what are the basics for a good adviser then they deserve to face, and lose, litigation.
Shine do however make a very sound comment and that is that clients are now “more sophisticated”. This increase in sophistication shouldn’t bother advisers at all from a litigation point of view but it is what is making the value of advice delivered and the on-going service proposition harder to justify and definitely making it more difficult to justify the ongoing advice / service fees that many advisers have got away with for years. Fees historically based on a percentage of FUA are becoming far more difficult to justify – more zeros does not necessarily mean more complexity, more work for a adviser.
Ambulance chasers
And the final nail in the coffin of this industry has been hit
“Shine Lawyers has taken to social media to prompt clients to think about their experiences and whether they suffered losses because of poor advice”… and ambulance chasing has well and truly reached our profession!